The town is named for Hezekiah Mars, who camped for three years at the base of Mars Hill Mountain. The town was incorporated in 1867.

According to the US census, the town has a total area of 35.2 square miles, of which, 35.1 square miles is land and 0.1 square miles (0.20%) is water. Mars Hill is split partly in half by the Prestile Stream, which runs directly between Fort Street and Silver Street, and then crosses beneath the Fort Street Bridge.

As of the 2000 census, there were 1,480 people, 614 households, and 413 families residing in the town. The population density was 42.1 people per square mile. There were 708 housing units at an average density of 20.2 per square mile.

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